Amazon vs. Google- Has Amazon Really Taken Over?

When it comes to digital media spend, where should agencies and brands put their focus: Google or Amazon, or both?

Some have already made their bets. Over the past few months, top tier agencies have announced that they are shifting 20-30% of their digital ad spend from Google to Amazon.

Recent digital insights suggest that Amazon garners more purchase-driven searches than Google does. And with a strong and growing Prime-subscription audience, consumers are incentivized to start their shopping journeys directly on Amazon.

At the same time, Amazon’s ad revenue is just one-tenth that of Google. Plus, there’s no denying the advertising industry’s dependence on Google. When Google hinted at ITP (Intelligent Tracking Prevention) changes on Chrome blocking third-party cookies in March, stock prices on leading platforms tumbled.

To help advertisers make their own decisions on the matter, Hitwise investigated the differences by market, category, brand, and audience.

1. Consider Volume and Conversions

Amazon and Google are vying for global ad spend, but each company has their own advantage in this fight.

Google has the upper hand when it comes to search volume. Downstream traffic to top retail sites from Google searches is nearly 2x greater in the US and over 23x greater in Australia. As seen in our recent analysis, this aligns with +50% YoY growth in Prime Day visits to Amazon’s AU site since they only launched in that market in 2017.

The advantage isn’t as strong in the UK. Traffic from Google to the UK’s top 10 retailers, including eBay, Argos & Next, is the same as the number of searches occurring within Amazon.

When it comes to conversions, Amazon converts 6x higher than the top 10 retail sites in the US. The advantage is also strong in Australia and the UK with conversion rates 2-3x greater than from Google.

Source: Hitwise. Downstream traffic from Google to top 10 retailers by market; Number of searches within Amazon; conversion rate of Amazon vs. top 10 retailers by market, May-July 2019.

Google garners more search, but Amazon has higher conversions. Based on this data, advertisers should increase spend on Google when building brand awareness, but then shift more spend to Amazon during a peak shopping season when consumers are most likely to purchase. However, nuances by category must also be taken into account before adjusting budgets.

2. Allocate by Brand Positioning

Another way to compare Google and Amazon is through branded and attribute-specific search share. Let’s look at the distinctions that exist within the TV category to see where Amazon and Google are preferred differently.

Across the UK, Google is the preferred platform when searching for a premium TV. Google draws a higher share of searches for 60+ inch TVs and from high-end brands like Samsung and Sony. Amazon generates more searches for mid-market televisions. A greater share of consumers go directly to Amazon when shopping for 40-59 inch screens from more affordable brands, like Philips.

Source: Hitwise UK. Share of TV-related searches within a portfolio of 650 terms on All Search Engines and Amazon. April 2019.

A manufacturer’s decision to allocate more budget to Google vs. Amazon should be dependent on the brand’s positioning & product range.

3. Track Seasonal Shifts Before Adjusting

Amazon has stronger conversion rates than Google, but is the ad spend contributing effectively?

Let’s consider two major categories within Amazon – Home & Kitchen and Grocery. Comparing the total purchases within the category to the share of sponsored page views (paid rate), the data shows that ad spend within Amazon isn’t always effective. Grocery’s highest paid rate occurs in February, despite garnering 500K more purchases in January. While December ad spend appears to pay off for Home & Kitchen, it doesn’t contribute as much in February and May when purchases are below average.

Source: Hitwise, US. Share of sponsored page views on Amazon and total purchases on Amazon within given category.

For Grocery, this could mean that advertisers aren’t optimizing to trending terms on Amazon. Make sure you understand what consumers search for over peak months so you can adapt your sponsored ads and product descriptions. Within Home & Kitchen, aligning ad spend on Amazon to the seasonality of the category will be most effective, especially when drilling into the subcategory or product level differences that exist.

4. Tap Into Prime Audiences

Amazon has over 100 million Prime members globally, adding to a growing pool of consumers that bypass Google on their shopping journey.

Amazon is still new in Australia, but they saw over 50K sign-ups for Prime in July, a +130% growth compared to sign-ups in December. During this six-month period, new Prime members were 23% less likely to use Google in their retail searchescompared to a regular Amazon shopper.

Not only that, but Prime members are far more engaged Amazon shoppers. One-tenth of their online retail activity is done on Amazon alone, they visit Amazon’s site more regularly than the average visitor, and they view an average of 10 more pages per visit.

Prime Member vs. Amazon Visitor AU

What should advertisers take away from this data? Expect Prime memberships to grow in July due to Prime Day but then track the dip in sign-ups or even cancellations to determine the longevity of this audience. Especially in new markets like Australia, it’s important to keep tabs on the rapid increase in members during peak months to tap into this engaged audience with more advertising on Amazon.

Key Takeaway

The takeaway is that there is no clear winner and there are many factors that go into media spend decisions. From a high-level view, it’s clear that Amazon has a way to go in generating the volume of searches that Google does, although that gap is closing, especially in markets such as the UK. Amazon’s high conversion rate gives it a leg up but increasing sponsorship on Amazon posts isn’t always effective.

When you get into the category-level details, allocation will depend on which site attracts a higher share of the segment you’re trying to reach. And while Amazon’s Prime audience is highly engaged, seasonal events will shift their impact on your strategies.

Advertisers must consider seasonality changes and category-specific nuances when determining whether and when to shift ad spend from Google to Amazon.

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